I came across this fantastic paper from Christian Zimmermann et al. It evaluates why economists cite other economists in their papers. The abstract is:
In this paper, we study the citation decision of a scientific author. By citing a related work, authors can make their arguments more persuasive. We call this the correlation effect. But if authors cite other work, they may give the impression that they think the cited work is more competent than theirs. We call this the reputation effect. These two effects may be the main sources of citation bias. We empirically show that there is a citation bias in Economics by using data from RePEc. We also report how the citation bias differs across regions (U.S., Europe and Asia).
The authors find that correlation effect in particular is stronger than reputation effect :-)
I had read about signalling being used to indicate quality of employment, policies etc. Now it is being used for citation as well.